Anda di halaman 1dari 15

Financial Accounting

Practice questions
Kamal Kalra 5 Aug 2012

ACCOUNTANC

Class XII

Capital & Revenue


Income can be Capital income or Revenue income Capital is from Capital gain eg Building purchased for Rs.10000 and sold for Rs.15000 If Plant is purchased for 10000 depreciated to 6000 and sold for 12000 then capital profit is 2000 (over the original price) and 4000 is revenue profit. Revenue Income Arises out of regular business transactions

Capital Expenditure is expenses on long term assets . fixed assets, installation, patents etc Revenue expenditure is expenses of running business, goods, repairs, expenses etc Similarly Receipts can be classified as Capital or Revenue. Capital receipts can be share capital or money from sale of FA and Revenue receipt is anything not in nature of Capital receipt Eg A second hand car is purchased for 20000 and 5000 is spent in overhauling it means Rs.25000 is capital expenditure If Inward freight for a plant was 1000 and installation 200 means 1200 is capital expenditure

Final accounts
The Trading account gives the overall result of trading in a given period Rev-Exp The Trading account gives the Gross Profit (or loss) Eg The following figures are taken from a Trial Balance Purchases 30000 PR 5000 Sales 40000 SR 5000 Gives GP of 10000 Opening and closing stock In above example if CS is 5000 Cost of Goods Sold= Net Purchases-CS= 25000-5000=20000 Hence GP=Net sales- cost of Goods sold=35000-20000=15000 Excercise Stock as on 1.1.98 10000 Purchases 40000 PR 5000 Sales 60000 SR 10000 Closing stock 31.12.98 15000 Calculate GP

Solution
Sales 60000 Less SR 10000 50000 Cost of Goods sold Opening stock 10000 Add net purchases 35000 Less CS 15000 30000 GP 20000 In case any expenses are incurred on carriage in these are to be added COGS In the above case if Rs.5000 was incurred on Carriage In that would make the GP 15000. Merchandise can also be used for Goods Sales Direct expenses= GP GP-all other expenses= NP Closing stock is shown as an asset in the BS and appears on the credit side of the Trading account GP=Sales (Opening stock + purchases + Direct expenses closing stock) Or GP=Sales +CS OS-Purchases-Direct Expenses Closing entries are passed only for entries of Trading & P&L A/c

Prepare Final Accounts for Suresh


The following Trial Balance was taken from books of Suresh Prepare the Trading and P&L A/c Debit Credit Stock as on 1.1.98 2000 Purchases and Sales 20000 30000 Returns 2000 1000 Carriage 1000 Cartage 1000 Rent 1000 Interest 2000 Salaries 2000 General Expenses 1000 Discount 500 Insurance 500 Closing stock as on 31.12.98 is 5000

Solution for Suresh


Trading and P&L A/c for Suresh Particulars Amount Particulars To Opening Stock 2000 By Sales 30000 To Purchases 20000 Less Return 2000 Less Return 1000 19000 By Closing Stock To Carriage 1000 Cartage 1000 To GP c/d 10000 33000 To Rent .. Salaries .. General Exp Discount Insurance NP to Capital A/c Total 1000 2000 1000 1000 500 8000 12500 By GP b/d Interest Discount Amount 28000 5000

_______ 33000 10000 2000 500

________ 12500

Manufacturing and Trading A/c


Mfg A/c gives the cost of goods manufactured during a period whereas Trading a/c shows profit/loss of trading activity . P&L A/c shows overall profit or loss There could be combined Mfg and Trading activity. In such cases the cost of production is transferred to Trading a/c and outside purchases of FG is added In a Mfg A/c stock are of 3 types raw materials , WIP, Finished goods RM consumed =Opening + Purchases Closing Stock (of RM) Expenses of Carriage in, octroi , customs duty etc. will be charged to Mfg A/c Factory Overheads will cover all indirect expenses say labor for polishing etc. Scrap sale is credited to Mfg A/c; if not sold its market value Prepare a Mfg and a Trading A/c from following: Stock as on 1.1.98 RM 10000 WIP 5000 FG 20000 ..31.12.98 RM 5000 WIP 15000 FG 30000 Purchases RM 50000 Direct Wages 10000 Carriage in 5000 Factory Power 5000 Dep. on Machines 5000 Purchase of FG 30000 Cartage in on FG 2000 Sale of FG 100000

Solution for Mfg and Trading A/c


To WIP (opening) To RM 10000 Purch50000 Less CS 5000 To Wages Carr In Power Depreciation Total 5000 Manufacturing A/c By WIP (Closing) By Cost of Prod to Trading a/c 15000 70000

55000 10000 5000 5000 5000 85000

85000 Trading A/c By FG Closing By Sale 30000 100000

To Stock of FG (op) 20000 To cost of prod (Mfg a/c) 70000 To purchases FG 30000 To Cartage FG 2000 To GP to P&L 8000 Total 130000

130000

Distinguish Trading expenses and P&L a/c


Expenses linked to actual production like power duties carriage in wages cost of raw material are all part of trading a/c whereas all overheads admin costs etc. are part of P&L A/c. In a manufacturing unit the Manufacturing A/c will precede the Trading A/c From the following BalancSe prepare Closing entries/ Trading & P& L A/c BS Op Stock 1250 Plant 6230 Sales 11800 Ret Out 1380 Dep 667 Cash 895 Comm cr 211 Salaries 750 Ins 380 Debtors 1905 Carriage in 300 Disc 328 dr Furniture 670 BR 2730 Printing 481 wages 1589 Carriage out 200 return in 1659 Capital 9228 bank od 4000 Creditors 1780 purchases 8679 BP 541 petty cash 47 bad debts 180 Value of stock on 31.12.98 was 3700

Solution : Journal Entries


Trading A/c To Opening Stock A/c Purchases A/c Wages A/c Return inwards A/c Carriage Inwards A/c Sales A/c Return Outwards To Trading A/c Trading A/c To P&L A/c P&L A/c To Dep A/c Insurance A/c Printing A/c Carriage Outward a/c Salaries A/c Disc A/c Bad Debt A/c Commission A/c To P&L A/c P&L A/c Capital A/c Debit 13477 Credit 1250 8679 1589 1659 500 11800 1380 13180 3403 3403 2986 667 380 481 200 750 328 180 311 311 628 628

Trading (A) & P&L A/c (B)


A To Opening Stock To Purchases 8679 Less Ret Out 1380 To Wages To Carriage inwards To Gross Profit bd Total 1250 By Sales 11800 Less Ret Inwards 1659 By Closing Stock 10141 3700

7299 1589 300 3403 13841 667 380 481 200 750 328 180 628 3614 By GP c/d By Comm

B To Dep Ins Printing Carriage out Salaries To Disc Bad Debts Net Profit to Capital a/c Total

13841 3403 211

3614

Balance Sheet
Liabilities BP Creditors Bank od Capital Add profit Assets 541 1780 4000 9228 628 9856 Cash petty cash BR Debtors closing stock Plant furniture 895 47 2730 1905 3700 6230 670 16177

16177

Prepare Mfg & Trdg A/c BS from TB


Particulars ShriBankers Capital A/c ,, Drawing A/c Mrs.Bankers Loan A/c Sundry Creditors Cash Bank Sundry Debtors Patents Plant & Machinery Land & Building .Purchases of RM RM 1.4.97 WIP .. FG .. Carriage in Wages Salary of Works Manager Debit 6100 4000 45000 250 4000 40500 2000 20000 26000 35000 3500 2000 18000 1100 27000 5600 Credit 41000

TB contd.
Particulars Factory Rent Taxes Factory Exp Royalty paid on Sales Sales Less returns Advertising Office Rent Insurance Printing Office Expenses Carriage Out Discounts Bad Debts Total Debit 3400 2500 1200 3000 4800 1000 5800 600 1400 750 215500 Credit

123400

2100 215500

Thank You